MALAYSIAN exporters cannot depend solely on the performance of the ringgit to competitively price their products as it would leave them vulnerable to pressure from lower cost exporters such as China, India, Vietnam and eastern Europe.

Second Finance Minister Tan Sri Nor Mohamed Yakcop said exporters should be innovative and focus on long term measures such as reducing the cost of doing business, improving productivity, employing suitable marketing strategies and enhancing the quality of their services.

"Based on most studies, the importance of external demand far outweighs the foreign exchange rate in determining the performance of exports," he said in reply to Fong Kui Lun (DAP-Bukit Bintang).

Nor Mohamed said this was proven last year when Malaysian exports saw a surge amidst a 6.8 per cent increase in the value of the ringgit.

To a supplementary question by Fong, he stressed that it was more important to establish stability in the currency market.
"A specific exchange rate at 3.2 or 3.8 is not very important. What is more important is achieving a stable rate to avoid any volatility in the market.

"In today's world, it is too complicated to use the currency exchange rate or value to increase exports. What is needed is an innovative system, reducing cost, breaking into other markets," he said.

Nor Mohamed noted that a clear example is the country's foray into other countries, beyond the traditional markets of United States, Japan and Europe, and expanding into two-way trade agreements with countries in the southern hemisphere, leading to a 400 per cent growth in exports.